In investing, complex strategies often get the spotlight.
Yet one of the most powerful principles is surprisingly simple — The Rule of 72.
It is a quick mental formula that helps investors estimate how long it may take for their money to double.
The Formula:
72 ÷ Rate of Return = Years to Double
No calculators.
No spreadsheets.
Just perspective.
Why This Rule Matters
The real power of the Rule of 72 is not mathematical precision — it is behavioral clarity.
It shifts the investor’s question from:
“Where should I invest next?”
to
“What rate of growth am I compounding at?”
Because over long horizons, even small differences in return create dramatic outcomes.
A Simple Illustration
• At 6%, wealth doubles in about 12 years
• At 9%, it doubles in roughly 8 years
• At 12%, it doubles in nearly 6 years
That is the difference compounding makes.
Not overnight.
But undeniably over time.
What Smart Investors Understand
Wealth creation is rarely about chasing the highest return.
It is about:
Staying invested
Allowing compounding to work
Giving capital enough time
Time — not timing — does the heavy lifting.
Important Note
The Rule of 72 is an estimate, not a guarantee.
Actual outcomes depend on markets, asset allocation, and risk factors.
But as a mental model, it remains one of the most effective ways to understand longterm investing.